Breaking News
Investing Pro 0
⏰ React to the Market Faster with Custom, Real-Time News Get Started

Reuters poll: U.S. house prices to fall 12% peak to trough - analysts

Economy Dec 02, 2022 10:31AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A home for sale sign hangs in front of a house in Oakton, Virginia March 27, 2014./File Photo

By Hari Kishan

BENGALURU (Reuters) - A retreat in U.S. house prices will extend into next year, although the expected 12% peak-to-trough drop predicted by analysts polled by Reuters would be just about one-third as severe as the last market correction 15 years ago.

Such a modest fall after a 40% rise in average house prices over the last two years based in part on a surge in demand for more space during the COVID-19 pandemic will not be enough to make housing affordable, analysts said.

House prices have doubled in the last decade but a doubling in mortgage rates since the start of this year from 3.3% to around 6.5% has brought the historic boom to a screeching halt.

Average U.S. house prices as measured by the Case Shiller 20-City index are forecast to rise 13.6% this year and fall over 5.6% in 2023, the Nov. 8 - Dec. 2 poll of 25 housing strategists showed. If realized, it would be the first full-year decline in house prices in a decade.

Average U.S. house prices peaked in June on this measure and are already down about 4% since then. They are expected to drop 12% in total, according to the median forecast, with estimates ranging as high as 30%.

"The expensive prices of homes coupled with high mortgage rates have made housing unaffordable for many Americans," said Crystal Sunbury, senior real estate analyst at RSM, a consulting firm.

"Market corrections are expected to continue into 2023, as housing gives back some of the steep gains that occurred over the pandemic."

Sunbury expects an average 5% decline next year, roughly the same as the consensus view.

But house prices need to fall close to 20% peak to trough in order to make them affordable, according to the median reply to an additional question, with forecasts as high as 40%, roughly the correction in the run-up to the 2007-08 financial crisis.

A strong job market and tight supply was expected to prevent a crash. A majority of respondents, 14 of 24, say the chances of that happening were low or very low. Among the remaining 10, nine said high and one said very high.

Existing home sales, which have dipped for nine months in a row to a 4.4 million annualized pace in October from nearly 6.5 million at the start of the year, were expected to average around these current levels until Q3 of next year.

Single-family homebuilding and permits for future construction too have dropped to the lowest levels since June 2020.

"Home prices in 2023 will be somewhat protected by inventory constraints," said Matthew Gardner at Windermere Real Estate.

"Many would-be home sellers will be reluctant to lose the historically low interest rate that they currently benefit from, and this will limit the national correction."

Since most Americans take out fixed 30-year mortgages, the impact of higher interest rates are not felt immediately by home owners, thereby reducing foreclosure risks and an outright crash.

(For other stories from the Reuters quarterly housing market polls:)

Reuters poll: U.S. house prices to fall 12% peak to trough - analysts
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email